CA Foundation · Business Economics · Price Determination in Different Markets
A firm can sell 8 units at ₹30 per unit. To sell 9 units it must lower the price on all units to ₹28. What is the marginal revenue of the ninth unit?
The marginal revenue of the ninth unit is ₹12. Total revenue rises from 8×30 = ₹240 to 9×28 = ₹252, a gain of ₹12. MR is lower than the price of ₹28 because the price cut applies to all earlier units too.
- A₹28
- B₹12Correct
- C₹2
- D₹10
Explanation
TR at 8 units = 8×30 = ₹240. TR at 9 units = 9×28 = ₹252. MR = 252 - 240 = ₹12. The ₹28 is the new price (AR), and ₹10 would wrongly ignore the price cut on the earlier eight units.
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